The Biggest Career Choice Of All Is When to Start

Grad school may cost you more than you think

You’re a college senior, a few exams away from that engineering diploma, and you have to decide whether to take a job or go to graduate school. To choose wisely you must estimate the likely economic return on your investment.

It’s not an easy calculation. The details will differ from place to place, school to school, and person to person. To simplify things, we’ll use average U.S. costs and benefits.

Let’s look first at the benefits of a graduate degree. In 2007, a new master of science in electrical engineering graduate earned more than US $66 000, compared with about $55 000 for bachelor’s degree recipients, according to the National Association of Colleges and Employers in Bethlehem, Pa. The extra bump from a doctorate was about the same: in 2007 new Ph.D. salaries averaged almost $76 000.

For those with graduate degrees, the good news only gets better over time, because salaries for those with grad degrees rise more and for a longer period. That might make you believe that getting an advanced degree is a no-brainer.

Not so. Even the most bare-bones calculation needs to include three additional factors—the cost of tuition, the cost of not working, and the value of money. Tuition for graduate studies averages $24 000 a year at a public university, according to the National Science Foundation’s latest report, ”Science and Engineering Indicators 2008.” Not working for a year costs you on average $55 000 (before taxes). And a dollar you spend today is worth a lot more than one you will earn decades from now, given both inflation and the real rate of return on investments.

”A doctorate is very expensive for someone in electrical engineering because of the earnings they would have to forgo while in grad school,” says Mark Regets, at the NSF’s division of science resources statistics. When you look back at four or five years in grad school, you might assess the final cost at $1 million.

Mercifully, engineering graduate students do well when it comes to financial support in the form of research assistantships, teaching assistantships, and fellowships. All in all, engineering and computer science doctorate recipients were the least likely to report both debt and high levels of debt, according to the NSF report.

Some benefits are harder to translate into dollars and cents. The biggest return is career flexibility, says Regets. ”You have more choices as to what you do, you have more choices over your conditions of employment, you’re less likely to end up on the lower end of the earnings distribution,” he says.

Higher degrees can bring job security in a shaky economy. In the shadow of the 2001 dot-com bust, the job market was toughest for electrical engineers and computer scientists. Unemployment for bachelor’s degree holders hovered around 5 percent, almost twice the rate as for Ph.D.s.

Grad school specialization also gives you an edge. Fast-paced changes in technology push companies to look for skills that cannot be acquired in a bachelor’s program. Texas Instruments now hires six times as many engineers with master’s degrees or higher as it did a decade ago.

Whether or not to go to graduate school is, in the end, a personal choice. Megan McGinty, who graduated this summer from Valparaiso University with a bachelor’s in EE, says she had planned to get a master’s degree but decided to start working full-time. ”Of course, earning a salary is going to be nice, but I don’t think this would have stopped me from attending grad school,” she says. She chose work in order to gain time to think about which area of specialization she wants to pursue. As an added bonus, her current employer will pay for her master’s degree.